Budget Resolutions

John Hayes Excerpts

Thursday 27th November 2025 Commons Chamber

[Sir Mel Stride]

The Minister says from a sedentary position that inflation is coming down. The International Monetary Fund says that inflation will be the highest in the G7 this year and next year.

We know that with high inflation, interest rates are higher for longer. That means businesses’ borrowing costs are higher. It means that consumer sentiment is dampened. It means that the servicing cost alone on the burgeoning debt that this Government are constantly adding to is currently £100 billion a year—twice what we spend on defence. In fact, if debt servicing were a Government Department, it would be the third largest in Whitehall—not spending money on better public services, as we are often told by the Labour party, but simply paying for the profligacy of the Labour party when it comes to borrowing.

The run-up to this Budget was a farce. We have seen weeks and weeks of uncertainty generated by the Treasury, which has leaked every possible combination of tax increases and then U-turned on some of them. It has flown so many kites that it has blotted out the sun, and a huge shadow has been cast across businesses, which have pressed pause on investment and hiring. The Parliamentary Secretary to the Treasury should speak to Andy Haldane, who concludes that what I am saying is absolutely right. It has also weighed down on consumer sentiment. All this hokey-cokey around what is in the Budget has done real damage to our economy on this Government’s watch.

[Sir John Hayes (South Holland and The Deepings) (Con)]

My right hon. Friend did a service to the House a week or two ago when he drew what he is describing now to the attention of this Chamber. He told the Government that these leaks were not only doing damage to the economy, in the way he has just described, but were a discourtesy to this House. Many times, Madam Deputy Speaker, you and Mr Speaker have said that announcements should be made to this House first. It is fundamental to this place that what the Government announce is brought here for scrutiny, not the public realm.

[Sir Mel Stride]

My right hon. and gallant Friend is entirely right, as usual, and something else has also been going on. I have written to the OBR to ask Richard Hughes exactly what happened with the information that the Treasury appears to have leaked out about the forecasts during the run-up to the Budget. I say that in the knowledge that the OBR’s own guidance says that information exchanged with the Treasury during the build-up to a Budget is provided to Ministers in confidence. Why is it then that the Chancellor herself was on the airwaves before the Budget, opining on the apparent coming downgrade to productivity? I have written to the OBR to ask whether it feels that that was appropriate.

I have also written to the permanent secretary to the Treasury to ask if he is implementing an investigation into the leaks coming from the Treasury. Interestingly, he has written back to me simply to say that in the event that there are suspected leaks, of course there is an investigation. He has not quite answered my question as to whether there is an investigation being undertaken at the moment, but I will be following up with him on that matter.

What has happened in this Budget? The OBR forecasts tell a sorry story: unemployment is higher in every single year of the forecast than it was forecast to be back in the spring. Inflation is up—we have seen the latest figures from the Office for National Statistics. Labour is the party that talks about resolving poverty; it is a disgrace that food inflation in the last set of figures went up way above the headline rate, from 4.5% to 4.9%. That rise is being borne by some of the most vulnerable and some of the poorest in our society.

On growth, of course the Chancellor tells a good story. She says that the growth forecast is up compared with spring this year, but, as the Parliamentary Secretary to the Treasury will know, it is down compared with the autumn of last year, when the OBR said that growth would be 2% in this year; it is now forecast to be 1.5%. In in every subsequent year, growth is forecast to be lower than was forecast back at the time of the spring statement. That is the simple fact.

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[Pat McFadden]

The hon. Gentleman should be supporting our changes because they have done two things: they are removing a number of luxury brands from the system and they are ensuring that more British-made cars are part of the scheme, and that will continue going forward.

By the end of the decade, we will have provided an additional £1 billion for employment support for the long-term sick and disabled through the pathways to work programme, so that people are not just signed off and written off—more reform that we are carrying out that the Conservative party did not. We are fixing the long-running injustice to carers that they ignored for years, which is more reform that we are carrying out that the Conservatives did not. There is more reform in this Budget than the shadow Chancellor implemented in his 20 months as Secretary of State for Work and Pensions.

But I know that we have to go further, because the greatest crisis is among the young. We inherited a situation with close to a million people not in employment, education or training. That is terrible in human terms, expensive in financial terms and deeply unequal, because the numbers are often highest in the most deprived parts of the country. Those are often places where there are already multiple problems and where the loss of hope seems the deepest. Addressing this problem is a cause around which we should rally. That is why in this Budget we offer a youth guarantee, with £820 million of investment, that will offer the young unemployed a training place, work experience or ultimately a job, giving hope and opportunity where previously there was none—more reform that we are carrying out that the Conservative party did not.

[Sir John Hayes]

I am very interested in that part of the Budget and I am grateful to the right hon. Gentleman for setting it out in more detail. One part of the youth guarantee is the boost for apprenticeships, particularly in small and medium-sized enterprises, but looking at the fine print, is that not already supplied by the apprenticeship levy? What small and medium-sized enterprises need, as I learned when I was the apprenticeships Minister, is some grant funding to get them started in the process. Does the Government have that in mind or is this simply a rehash of the apprenticeship levy?

[Pat McFadden]

I note the right hon. Gentleman’s request for more public expenditure and I am coming on to the growth and skills levy in a moment. What we will do with that is tilt it more towards young people and towards more short courses, and this Budget puts a further £725 million into that, which will enable the full funding of apprenticeships for the under 25s for small businesses. That is good for young people and good for employers. It is important, because no matter where they are from, what their background is or who their parents are, every young person should have the chance to make the most of their life. I want the country’s young people to know that through our youth guarantee, the apprenticeship support and the other measures outlined in the Budget and outside it, we will support them, we believe in them and we want them to succeed.

Even after that, I know that we need to go further, and that is why I have asked former Health Secretary Alan Milburn to report in the new year on the issues of young people, work and inactivity, looking across departmental boundaries and recommending policy responses that will offer young people more opportunity and a better chance in life.

After the Conservatives either neglected all that or opposed that which they did not neglect, what have they got left? Arguing that instead of our approach, people’s wages should be lower. We saw where that led during the last Parliament. The shadow Chancellor talked about living standards—during the last Parliament, living standards declined more than at any time in living memory. Now living standards are rising in this Parliament and wages have risen more in a matter of months than they did in 10 years when the shadow Chancellor’s party was in office.

As people sometimes remind me, I have been around for quite a while. I am proud to have served in the last Labour Government, which lifted 600,000 children out of poverty—and almost all the measures delivered were opposed by the Conservative party. In fact, the Conservatives’ record was a rise in child poverty of 900,000. Their argument was that the two-child limit would force people to make different choices about the number of children that they would have, but that is not what happened; it simply forced more children into poverty.

The real indictment goes deeper, because, as the right hon. Member for Central Devon knows, the two-child limit was not really a welfare policy at all. In the end, it was not even about saving the money. The truth is that it was about political dividing lines. It was a device used by the Conservative Government, in which children were the weapon of choice. That is what it was about, but not any more. Tackling child poverty is an investment in the future of those children and in the country, because children who do not grow up living in poverty will have a better life. This policy is not just about the distribution of money; it is an investment in opportunity. That is why the Chancellor announced the abolition of the two-child limit in the Budget. As my hon. Friend the Member for Calder Valley (Josh Fenton-Glynn) said, the clear majority of households that will gain from this measure already have someone in work. The policy will lift 450,000 children out of poverty, and that number will rise, thanks to other measures, such as the expansion of free school meals, help with energy bills, and the expansion of free childcare so that more parents can take up work.

This will be the largest reduction in child poverty over a Parliament since records began. As the Chancellor spelled out, it can be funded by a combination of tackling fraud and error in the system, the Motability and other changes, and the changes to online gambling taxation that she announced yesterday.

We understand that the health and welfare systems are deeply connected, so we will continue to get waiting lists down, and to treat more patients. We announced 250 new neighbourhood health centres in the Budget. Waiting lists and waiting times rocketed when the Conservatives were in office, and that was not just a health issue; it was an economic and benefits issue. A system that treats people more quickly, rather than having them wait in pain, is good for the economy, too. Through the reforms that we are making on incentives and support in the system, and on opportunity and tackling poverty, we are beginning to change the welfare state from a passive distributor of benefits to a platform of opportunities to get people back into work. However, we need to go further, and we will.

No one on the Labour Benches underestimates the scale of the challenges we face. There is no escaping the fact that the OBR’s decision to downgrade its assessment of productivity is the official verdict on the Conservatives’ years in office. They left this Chancellor with a £16 billion hole to fill. That hole is not because of the decisions she took, but because of the scarring effects of the Conservatives’ time in power. A botched Brexit deal, austerity that impoverished the public realm, and cuts to capital investment—the OBR is clear that they all caused long-term damage to the UK’s productivity and economic growth. That has to be owned by the Conservatives.

The shadow Chancellor attacked the Budget in the strongest terms, and he is right that it is a contrast with the Conservatives’ record, because they took the country to the very precipice of economic disaster. They used the British public as a test bed for a giant ideological experiment that saw mortgages go through the roof. The Bank of England had to launch an emergency rescue package for the country’s pension system. The Conservatives shook international confidence in the UK economy and destroyed whatever economic credibility they had by their own hand. There is a difference in our approaches—a very welcome one.

We have trade agreements with the world’s biggest economic powers—agreements that eluded the Conservatives. We have a reformed planning system, which will get the country building. Public investment is at its highest level for four decades, and inflation is coming down faster, as a result of the measures that we are taking. It will come down by a full 0.4 percentage points next year, according to the OBR. Borrowing is down in every year of the forecast. We are keeping corporation tax at the lowest level of any G7 country. We have help for high streets, and permanently lower tax rates for 750,000 businesses. We are doubling eligibility for our enterprise tax incentives, so that new businesses can not only be created, but can grow and scale up here in the United Kingdom.

We are cutting energy costs for 7,000 businesses to make manufacturing more competitive. We are providing help with the cost of living through the first rail fare freeze for 30 years. We are freezing prescription charges. Energy bills are being cut by £150 per year. We are raising the national minimum wage for millions of workers, as recommended by the independent Low Pay Commission. We are expanding free breakfast clubs, and there are free school meals for all children in families on universal credit.

This is a Budget for the whole country. It helps with living standards and helps people to meet their monthly bills. It fixes some of the problems of the past, and gives the country strong foundations for the future. It is a Budget that believes in maintaining the public square, and it continues the progress that we have made on the NHS. That progress is, for us, not just a social goal, but an economic goal. It is a Budget that protects the state pension and raises its value by £575 next year. It is a Budget that continues with welfare reforms, reduces child poverty and offers hope to young people for the future. That is the difference, and that is why we should support the Budget today.

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[Sir John Hayes (South Holland and The Deepings) (Con)]

G. K. Chesterton said:

“It is human to err; and the only final and deadly error, among all our errors, is denying that we have ever erred.”

Yesterday’s Budget brought into stark relief the fact that the Chancellor and this Government have erred and, worse, are in denial about their error.

The UK faces a twin-pronged fiscal crisis. Public debt is at around 100% of GDP and rising, with debt interest making up about three quarters of the deficit. Public spending, at close to 45% of GDP, is near to a high in the post-war years. Much of that failure is systemic—Governments of all colours have failed to address some fundamental macroeconomic challenges—but yesterday’s Budget not only failed to fix that entrenched mess, but did not even acknowledge that it is happening.

As the global liberal order decays, we face global economic challenges on a scale we have not seen for 100 years. Artificial intelligence risks transforming the jobs market. A recent study by the National Foundation for Educational Research forecast that up to 3 million jobs could disappear by 2035. Employment in sales and customer service occupations has fallen by more than 10% since 2021, and around 12 million people in England currently work in occupations deemed to be in decline. That requires Government to play a role.

Government can be a force for good. This House took far too long to recognise the damage that would be done by the internet, and finally, when those horrors were obvious, it legislated. We need to restrict AI where it does similar damage, rather than indulging this naive faith in technological change at all costs.

The old, comforting bourgeois assumptions about the benign nature of globalisation and the faith in technological change risk endangering many of the jobs I have described, and the purpose and pride they fuel. The US President was right to impose tariffs on cheap goods that were destroying vital US industries. In response, China is dumping surplus goods in Europe, and it has been estimated that 3 million industrial jobs in the EU are at risk from that surge of subsidised imported goods.

In response to these existential threats, the Government seem frozen in time. Too much of the establishment remains wedded to dysfunctional orthodoxies. We are playing by the rules of the game when the important players have left the table. We cannot continue to proselytise for unbridled free trade when the two biggest economies in the world, China and America, have given up on it. We have to protect those industries that are critical to our national economic interests, building greater economic resilience by reindustrialising and by manufacturing again, so ensuring that more of what we consume is made here in Britain, with the jobs, skills and reassurance that provides. An economy can nourish communal health, but it cannot do so in a world that is wedded to globalised, multinational, corporate companies that are careless of the difference they make to communities such as mine in Lincolnshire and those across the country.

Here in Britain, and across the western world, living standards are stagnating, productivity growth has all but disappeared, and the state grows ever bigger in the face of rising poverty and worklessness. Why, then, does the political class continue to profess a blind faith in an economic model that has delivered record levels of state dependency? The assumption that little can be done to reverse the inevitable process of industrial decline is simply wrong, as the experience of the United States suggests. Once we tune out the noise surrounding President Trump’s on-and-off tariffs, we can hear the faint stirrings of industrial revival. A detailed study of the impact of tariffs during the President’s first term found that once the pre-existing decline in manufacturing employment was accounted for, tariffs contributed to rising employment in areas with a large presence of protected industries. Neither did consumer prices surge in the United States, despite the predictions of liberal economists. Just imagine the potential benefits of a consistent and coherent trade policy that puts the needs of British industry first.

[Bradley Thomas (Bromsgrove) (Con)]

Does my right hon. Friend agree that in a world where capital and labour are highly mobile, and one that is increasingly pressured as a result of energy costs, the best thing the Government could do is pare back the regulation that inhibits manufacturers’ ability to compete competitively and prevents the UK from being a very attractive destination for that capital and labour?

[Sir John Hayes]

My hon. Friend makes a valuable point. Both Governments and these big corporates welcome a regulatory system that disadvantages small and innovative companies. Big organisations quite like regulation, for they can cope with it because of their scale; small organisations struggle with it, because they simply do not have the resources to deal with it.

In 1979, manufacturing accounted for 30% of GDP in Britain; today that figure is just 8.5%. Manufacturing employed 21% of the workforce in 1982; by 2023 it employed just 8%. By some measure this is the greatest deindustrialisation of any major nation. We can and should build a different economic model—a new order.

We need a fundamental rethink of our economic model, breaking from the failed orthodoxy that currently prevails and moving towards what Hilaire Belloc and GK Chesterton called “distributism”, where local economies —introspective, feeding communal health, with shorter supply chains—mean that we can make more of what we need here in the UK, fuelling skills and nourishing communities. What Chesterton and Belloc intuitively understood was that the excessive concentration of economic power harms society and fuels the discontent that many people in Britain feel today. Real wages have stagnated, while those at the top—large corporations in particular, often based overseas—accumulate huge wealth and power.

We can build that new order. Small family businesses enrich the places in which we all live. Mutuals and co-operatives sustain communal and economic health in localities. We can do this, but it requires a radical rethink of the economic orthodoxy. The Budget does not suggest that rethink. All parties must step up to the mark and understand that we live in a post-liberal age where a new order is possible. Let us together build that new order, to deliver the common good by sustaining our national interest.

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[Bradley Thomas (Bromsgrove) (Con)]

Yesterday the Chancellor attempted to present the Budget as a bold plan to rebuild Britain, but when we strip away the rhetoric, we see a Budget that is unsustainable, unfair and damaging to the very foundations of our economy. Most importantly, it is bad for all our constituents. Last year, the Chancellor raised taxes by £40 billion and promised that she would not be coming back for more. Yet here we are, one year on, with another £26 billion tax raid.

Credibility matters. When promises are broken so quickly, trust evaporates, and my constituents feel that betrayal directly. Families who believed the Chancellor’s assurances will now find themselves paying more tax, with less money left at the end of each month. The first duty of any Budget is to foster growth, yet the indicators all point in the wrong direction. Inflation is up, with food inflation at nearly 5%, so families in my constituency are paying more for their weekly shop. Taxes are up, and the OBR has confirmed that the UK’s tax burden is at a record high. It is projected to reach 38.3% of GDP by 2030. Our constituents are working longer hours, only to see more of their pay taken away.

[Sir John Hayes]

Food production in this country is critical to my constituency, my hon. Friend’s and others’, yet public procurement still does not prioritise British goods. Might he invite the Government to look at that again? It is absolutely right that this House, the Government and the public sector should support British-made goods, and British-made food in particular.

[Bradley Thomas]

My right hon. Friend is absolutely correct. The Government have a duty, in every single thing that they do and in their entire approach, to ensure that they promote the interests of the UK and of the businesses and farms that strive to keep us fed and prosperous.

Unemployment is up and redundancies are rising. In my constituency, local employers are cutting jobs, leaving families anxious about their future. Spending is up, and borrowing overshot forecasts by £9.9 billion this year. My constituents know that every pound borrowed today is a pound that they will repay tomorrow. Confidence is down, with business surveys showing stagnation, and local shopkeepers tell me that they are holding back investment because they see no stability. Growth is also down, with GDP growing by just 0.1% in Q3 of this year. My constituents see stagnation in wages, stagnation in opportunity and stagnation in hope.

This is Labour’s economic scoreboard: inflation is up, taxes are up, unemployment is up, spending is up, borrowing is up, confidence is down and growth is down. That is not rebuilding Britain; it is dismantling Britain’s prosperity, and all our constituents are paying the price. Two thirds of the British public now say that they want to see spending cuts. My constituents are tightening their belts, and cutting back on holidays and meals out. Some are even cutting back on heating. They expect the Government to do the same and to live within their means, yet Labour’s Budget expands spending recklessly.

Businesses in my constituency are being hit hard. Last year, employer national insurance contributions were increased and business rates relief was cut, and businesses are struggling to survive. For savers, ISA allowances have been reduced, which undermines savings. Retail has lost over 100,000 jobs in the last year. With our high streets feeling the pain, shops are closing and livelihoods are being destroyed. The Budget offers no relief for small businesses in my constituency; it only offers more burdens.

Labour claims that fairness is at the heart of the Budget, but fairness is not what families in my constituency are feeling. Income tax thresholds have been frozen, dragging more workers into higher tax bands, and savers have seen their allowances cut. Even electric car owners, who have been encouraged to go green and to do the right thing, are now being penalised. This punishes aspiration.

Farmers in my constituency are among the hardest hit, and the family farm tax remains largely intact. The changes to inheritance tax threaten the survival of the family farm, and rising input costs and inflation are compounding the pressure. Farming is not just an industry; it is the backbone of our food security, as my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) pointed out, and the backbone of rural life, yet Labour continues to undermine it.

We are seeing an exodus of capital and labour in a world that is highly mobile. Over the last year, we have seen an exodus of high-net-worth individuals. While Labour Members may scowl at and casually dismiss that, the reality is that the displacement of those individuals would require another half a million average earners paying tax to plug the gap of tax revenue lost. That is the scale of the hole that the Government have created. Who will fill that? All of our constituents will—ordinary families, ordinary workers and ordinary savers.

Ambition without discipline is not a plan; it is a gamble. Labour’s Budget is a gamble with Britain’s future. Every £1 spent servicing debt is £1 not spent on public services, every broken promise erodes trust and every squeeze on families and businesses undermines the engine of our economy. Let us be clear: Labour spends until it runs out of other people’s money, and when the money runs out, our constituents pay the price. All of our constituents deserve better than what we have seen in this Budget. They deserve a Government who will restore fiscal discipline, encourage enterprise and deliver fairness for everyone.

Yesterday’s Budget is not a plan for the future, but a blueprint for decline. It ignores the public’s demand for spending cuts and for the Government to live within their means. It presides over the loss of further jobs, and it drives away wealth creation, leaving ordinary taxpayers to pick up the bill. It squeezes families, undermines businesses and will devastate farmers. This is not rebuilding Britain; this is dismantling Britain’s prosperity. Labour spends until it runs out of other people’s money, and my constituents cannot afford that any longer.

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[Oliver Ryan (Burnley) (Lab/Co-op)]

This Budget sets out a serious and responsible direction for our country’s future and speaks directly to the needs of people in Burnley, Padiham and Brierfield. It supports families and workers, puts the public finances back on stable ground and backs the businesses that are the backbone of towns like ours.

Crucially, we are already seeing real, measurable progress for Britain after 14 years of incompetence, failure, stagnation and rampant inflation. Growth has been upgraded to 1.5% this year and wages have risen faster in our first year than during the last decade the Conservatives were in power. For people in towns like ours, those are not abstract statistics; they are the difference between treading water—constant struggle—and finally feeling as though we are moving forward again as a community and as a country.

Families in my area have felt the squeeze more than most. I hear weekly about parents monitoring the thermostat hour by hour, commuters worried about every fare rise and households whose disposable income has simply evaporated with the cost of living. I welcome our plan, which gives people real relief right now: £150 off energy bills next year, rising to £300 for those who need it most; more support; more homes insulated and more homes built in towns in our constituencies; a freeze on rail fares, petrol duty and prescription charges; and, for our NHS, the largest reduction in waiting lists in almost 20 years, in addition to 250 new neighbourhood health centres, 5.2 million more NHS appointments and care brought closer to home, with more doctors and nurses.

However, it is not just short-term support that matters; it is long-term renewal. We are maintaining the highest levels of public investment in 40 years, because our constituencies cannot rebuild on the foundations left behind after austerity and the chaos of 14 years of Tory Britain. Better transport connections, stronger and better-funded local services, investment in skills and young people, and higher-paid, quality jobs—these remain the building blocks of renewal in Burnley, Padiham and Brierfield.

[Sir John Hayes]

Will the hon. Gentleman give way?

[Oliver Ryan]

I will not, because of time.

We are doing all that while paying down the national debt and getting into surplus—something promised several times by the Tories but, as far as I am aware, never done. We are doubling the fiscal headroom, which is a momentous achievement—something we are probably not shouting about enough—and taking responsibility for the public finances after the rank mismanagement of the previous Government.

For too long, the welfare system that we inherited left working families too poor to eat and wrote off hundreds of thousands of people as too sick to work without offering them proper support. Indeed, when the shadow Chancellor was Secretary of State for Work and Pensions, the welfare bill soared by £33 billion, and he put an extra 229,000 people into the welfare system. The welfare bill doubled during the Conservatives’ time in office, which is bad for our budget, our communities and the people they wrote off. We are finally putting that right.

We are addressing poverty at the same time by scrapping the two-child limit, which is lifting 450,000 children out of poverty nationally, including a huge 5,170 children in Burnley, Padiham and Brierfield. We are guaranteeing jobs for people under the age of 25, ending long-term youth unemployment and ensuring that no young person is abandoned.

I am conscious of time, Madam Deputy Speaker. I just want to make a point about support for businesses. We have not only maintained Government capital investment plans, but made sure that we will lower permanently business rates for local employers and multipliers for our high street. We are doing this to create a stable and long-term approach for businesses.

We are taking important steps such as relieving stamp duty on the first three years of new UK-listed companies for larger entities, which is our invitation to the world to do business here. That will have a direct effect on our competitiveness. We are putting in place more support for manufacturers in places such as my constituency, where energy bills have swelled over the last 10 years. We are extending capital allowances for business assets and leasing, and we are extending tariff suspension and support likewise. This will help some of my area’s largest employers to grow. In addition, we are extending NICs relief for those who hire veterans. Our measures include ISA reform to encourage investment into quite sizeable businesses. I am also interested in the call for evidence on firms with scale-up potential, which will end next year.

All these steps will create growth for the economy and help my constituents, and I greatly welcome this Budget.

[Ben Obese-Jecty (Huntingdon) (Con)]

Tax increases of £26 billion and the tax burden rising to an all-time high of 38% of national income—this is a traditional, good old-fashioned high-tax, high-spend Labour Budget. It is a Budget that locks in a debt ratio of 100% and an economy with little or no growth. It effectively ends Labour’s pledge to grow the economy and raise living standards. The growth in real disposable incomes over this Parliament is now expected to be the second worst since records began in the 1950s. This is a Budget to appease the left of the parliamentary Labour party rather than the general public. It is a Budget to shore up the Chancellor’s weak position and that of the Prime Minister. We will see how successful that has been come May.

Since Labour came to power, the Chancellor has raised taxes by £66 billion, which is more than any Government in the last 50 years. When the Chancellor proudly announced that growth had increased by 0.5%, there were cheers from the Government Benches, but she did not mention that that figure was a downgrade from the 1.9% forecast earlier in the year, nor did she make reference to the downgraded projections for the rest of the decade. The Office for Budget Responsibility has downgraded its growth forecasts for real household disposable income per person over the next five years. The OBR’s “Economic financial outlook” report states that growth will slump to an average of 0.25% a year over the forecast,

“well below the last decade’s average growth of 1% a year”.

The average household will be £850 poorer at the end of this Parliament than when Labour took office.

The Chancellor said:

“today £1 in every £10 the Government spend is on debt interest—not on paying down that debt, but just on paying the interest”.—[Official Report, 26 November 2025; Vol. 776, c. 389.]

Some £113.7 billion is currently being spent on servicing that debt, and by the end of this Parliament that figure will reach £140 billion.

For a working person on average earnings, the tax threshold is frozen and will be for the rest of the decade. Pensioners will be dragged into the basic rate of income tax for the first time; 780,000 people are going to be dragged into being a basic rate taxpayer, and nearly a million will become higher rate taxpayers. For people on benefits, those benefits are not frozen; they are index- linked to inflation.

The OBR has forecast that over the next five years, welfare spending will rise by £73.2 billion to £406.2 billion. The U-turn on lifting the two-child benefit cap beggars belief. For it to go from a policy that saw seven Labour MPs lose the Whip, and that was effectively the catalyst for the creation of an entirely new political party on the left, to a totemic Labour policy is transparently a move to both appease the Labour Benches and shut the door on the surge in support for a Zack Polanski-inspired resurgent Green party and the stuttering Your party. By the end of this Parliament, lifting the cap will cost £3 billion a year. That is more than the total spend on fire and rescue services in England.

The heavily trailed high value council tax surcharge is lacking crucial detail on how it will be implemented. Doing it properly will require a revaluation of every property in the country by the valuation office by April 2028 in order to understand which houses are in scope. What will the criteria for that be? How will the value of the house be decided if it has not been sold in recent years? Moreover, the revenue will go to central Government, not the local authority. It will disappear into general taxation, and those paying the tax will likely never see any local benefit from it.

The decision to raise the minimum wage looks good at first glance.

[Sir John Hayes]

I support the minimum wage. It is important that working people, particularly less well-off working people, are adequately rewarded. Does my hon. Friend agree that the real impact will be on small and medium-sized businesses? Those businesses are already dealing with increasing cost burdens. When the Minister sums up, he might want to reflect on the effect that that may have on the creation of employment in those kind of businesses.

[Ben Obese-Jecty]

I wholeheartedly agree. I have spent the last year talking to small businesses in my constituency that have been crippled by the measures in the last Budget. When this year’s measures come in as well, some of those businesses will struggle desperately to keep on lower earners, particularly young people.

My first job as a 16-year-old was working in a supermarket, and I am sure many Members had a similar experience. Those opportunities are going to disappear for young people as a result of these measures. What this Labour Government have not taken into account is that every above-inflation wage increase leads to higher business costs, lower investment and fewer opportunities for those we represent. Many businesses that want to employ people will now find themselves unable to take on staff or to take the risks that the Chancellor mentioned, meaning that businesses cannot grow.

We are very likely to see the wage compression effect, whereby the gap between those on the minimum wage and those in more skilled or experienced roles becomes smaller. That, yet again, leads to a lack of incentive to develop skills and opportunities for those with them. The Government must address that, as it will curtail opportunities for young people and lower earners. Unemployment is now set to peak at 5% and the number of economically inactive people will also rise.

The pay-per-mile tax on electric vehicles will surely disincentivise the switch to EVs before the ban on new petrol and diesel vehicles kicks in, and the OBR estimates that there will be 440,000 fewer EV sales over the next five years because of the tax. How much tax revenue will be lost because those sales never happen? Then there is the plethora of other taxes that are part of the smorgasbord: the tourism tax, the NI raid on pension contributions, the reduction in the tax-free cash ISA allowance and even a milkshake tax.

We have not even touched on the absence of the commitment to 3% of GDP on defence anywhere in the Budget. There is not a single reference to it and I do not understand how. We saw today that the service chiefs will write to the Defence Secretary to tell him that it will not be possible to deliver the strategic defence review. I would love to hear from the Minister how Labour will facilitate defence in this day and age.

The OBR has stated that not a single measure contained in the Budget will improve growth, which has, in fact, been downgraded from the figure forecast in the summer. Taxes on working people have been increased by stealth to pay for welfare. That will be Rachel Reeves’s legacy, and this is quite possibly her last Budget—

--- Later in debate ---

[The Parliamentary Secretary to the Treasury (Torsten Bell)]

It is a pleasure to close today’s debate, and I thank all Members for their contributions, including my hon. Friends the Members for North Warwickshire and Bedworth (Rachel Taylor), for Exeter (Steve Race), for South East Cornwall (Anna Gelderd), for Gower (Tonia Antoniazzi), for Norwich North (Alice Macdonald), for Newcastle upon Tyne East and Wallsend (Mary Glindon), for Newcastle-under-Lyme (Adam Jogee), for Newcastle upon Tyne Central and West (Dame Chi Onwurah), for Dunfermline and Dollar (Graeme Downie), for North Northumberland (David Smith), for Glasgow North (Martin Rhodes), for Mid Cheshire (Andrew Cooper), for Glenrothes and Mid Fife (Richard Baker), for Earley and Woodley (Yuan Yang), for Congleton (Sarah Russell) and for Calder Valley (Josh Fenton-Glynn), who all made strong cases for this Budget.

I listened carefully as Opposition MP after Opposition MP talked down the British economy, as the hon. Member for Huntingdon (Ben Obese-Jecty) did, talking down British workers and talking down British entrepreneurs. I have been trying to remember what it reminded me of. I was racking my brains, but then it came to me: they are just reading out exactly the same script that they had at exactly this time last year. The shadow Business Secretary, the hon. Member for Arundel and South Downs (Andrew Griffith), frothing with his usual excitement, claimed that Britain would spend 2025 in recession. He said:

“‘Could we be in recession?’ Yes we could.”

That was his forecast.

The actual figures are in, and the truth is that Britain in 2025 did not just avoid recession, but beat the forecast. The OBR has revised up growth this year from 1% to 1.5%. Let us look at wages. As my hon. Friend the Member for Erewash (Adam Thompson) said, wages are up in the forecast and, far more importantly, in people’s pay packets. Wages have gone up more in the first year of this Government than in the entire first decade of the last Conservative Government, and there is much more to do.

Changing Britain was always going to be hard, and we now know that the damage from the last decade of austerity and Brexit was worse than previously thought. That lies behind the productivity downgrade that the hon. Member for West Worcestershire (Dame Harriett Baldwin) rightly raised, but the question is how we respond to that news.

[Sir John Hayes]

I notice that the Minister is wearing a William Morris—or William Morris-esque—tie, and what Morris understood was the importance of craft and skills. The Government addressed apprenticeships in the Budget in a minor way, but does the Minister know that simultaneously the skills White Paper envisages downgrading apprenticeships by diluting the competencies they confer, thereby undermining their reputation with learners and employers?